by John Darer CLU ChFC CSSC RSP
Two structured settlement annuity issuing life insurance companies have moved to stifle the purchase of structured settlement payment rights by individual investors through their traditional or Roth IRAs, according to one of our sources. The reason, according to our source, is that each of the life insurance companies wish these IRA holders to buy their traditional retirement annuity products. Does this story represent an isolated series of incidents or does it reveal a wider trend?
The problem for the life insurance companies is obvious. The structured settlement payment rights are being remarketed "in your face", using the trademarked brand name of the insurers to compete against the insurers' own products. Furthermore what is being sold using the insurer's trademark brand name brings the insurer no compensation for the use of its/their trademarks.
- Then you have the remarketers , who may not hold insurance licenses in the states they are soliciting, labeling the product they are selling "an annuity" when it is structure settlement payment rights.
- You have remarketers citing statutory protections relating to these products that apparently do not exist for the product they are selling. If they were annuities issued by companies whose trademarks are being appropriated, and the remarketers were licensed and appointed with the carriers in question, there is a prohibition on advertising the statutory protection under most state insurance laws.
Follow the ELNY liquidation very closely if you are considering committing a sizable amount of capital. Nothing is final yet, but it appears that investors (as opposed to annuitants) are going to be hosed.
In 2010 I reported that personal injury attorneys have purchased such payment rights for their pension plans, after learning this from a source in the tertiary market. It should be noted that some life insurance companies purchase or have purchased, or have been alleged to have purchased, securitizations of structured settlement payment rights.
The source of this information has revealed the names of the two companies to this author but this author chooses not to reveal the names of the companies in this post